Finance Charge

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Finance Charge

The amount owed to a lender by a purchaser-debtor to be allowed to pay for goods purchased over a series of installments, as opposed to one lump sum at the time of the sale or billing.

A finance charge, sometimes called the cost of credit, is expressed as an annual interest rate levied upon the purchase price. It does not include any amounts that the lender might require for insurance premiums, delinquency charges, attorney's fees, court costs, collection expenses, or official fees that might be incurred should the debtor default in the repayment of the debt.

Federal and state "truth-in-lending" laws mandate that the complete cost of finance charges be fully disclosed on credit agreements and billing statements.

Cross-references

Consumer Credit Protection Act.

References in periodicals archive ?
The call centre informed me that this was not a mistake and that they would charge the finance charges until I complete two months of full payments
Credit unions that issue credit cards are more apt to market to college-educated people, avoid assessing minimum finance charges and embrace lower minimum payments, among other things, according to a new CFPB study.
Also study payment terms carefully -- some cards have a hierarchy in place where the transactions subject to the highest finance charges, typically cash advances, are the last to be paid off.
Finance charges are based on the amount owed at the end of the previous billing cycle.
May 22 -- The Assembly Insurance Committee has released legislation for future floor vote that would limit finance charges on insurance premiums at $20 per $100 for personal, family, or household policies.
Open-end credit generally refers to a revolving line of credit (such as a credit card account) where repeated transactions are expected, the available credit is replenished as unpaid balances are repaid, and finance charges are assessed on unpaid balances.
Plaintiffs allege that insurers should disclose annual percentage rates and finance charges if a single annual payment would total less than a year of monthly, quarterly or semiannual premium payments.
The Truth in Lending Act requires creditors to compute finance charges based on your average daily balance.
In the latter claim, finance charges were understated by an average of $613 in the loans where the violation occurred.
Errors can always be rectified, but finance charges for late payment are rarely removed unless associated with an error.
The bank charged me finance charges for March of Dh206, Dh755 for April and Dh882 for May.
We will calculate finance charges on cash advances by multiplying the 'average daily balance of cash advances' by the total number of days in the billing cycle, and multiplying the product by the daily periodic rate of finance charge then in effect.

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